What are the benefits of Dryden’s Advanced Funding program?  

Dryden’s program provides budgetability, predictability, favorable financial accounting presentation, asset/liability management (investment income), beneficial tax treatment, opportunity to build needed reserves to buy-down future risk.  Dryden quantifies the upper exposure limit, which includes reserve and trend.  An Advanced Funding transaction would be implemented based on the actuarial analysis performed.  While Advanced Funding doesn’t lower the cost of claims, Dryden has access to health care management vendors and can integrate their compliance-based programs which significantly reduce the overall cost of claims.  In this respect, the overall cost of claims is reduced over time and can be greatly enhanced through the integration of Dryden’s program.

Does Dryden replace my broker/consultant, TPA, insurance carrier relationships?

No. Dryden does not replace your current broker/consultant, TPA, or insurance carrier relationships.

Does the Dryden Program require plan design changes?

No.  Implementing the Program does not require plan design changes.

What is the collateral for the loan?

The financial success of the transaction hinges on several important components – counterparty exposure, asset allocation and an ability to meet annual required contributions. Dryden has developed several customized solutions to maximize the return of the loan which are designed to suite the client’s risk parameters. The customized portfolios are structured to amortize over the course of the transaction, provide incremental income to off-set the cost of funding as well as in some structures provide a hedge against medical care inflation. Typically, it is the highly rated investment grade securities which serve as the collateral of the loan.

In the Self-Insured analysis, what do the Variable Costs & the Fixed Costs include?

Variable Cost(s) include: Medical/Surgical Claims; Inpatient/Outpatient Costs; Pharmaceutical Costs; Mental Health; Dental; Ancillary Costs.  Simply, Variable Cost(s) ONLY represent claims exposure.  Fixed Cost(s) represent: Third Party Administration Costs; Stop-Loss; Aggregate Reinsurance (if any) and any internal costs attributed to your organization to manage the plan internally.

How does our credit affect the overall financing of the transaction?

Several factors will impact the transaction’s cost of funding.  Market conditions, the transaction’s maturity and most importantly, the financial strength of the client will all be important variables in determining the financing costs of the transactions.  Typically, the client’s financial strength determines the cost of funding although market conditions do indeed have an important component in the process.   

Who is the obligor of the debt?

The trust is the obligor of the debt.

Who is the beneficiary of the assets held within the Trust?

The employees are the beneficiaries of the Trust

Can monies held in the trust be used for things outside of healthcare expenditures?

No.  The trust can only pay healthcare expenditures.

What is the effect on your organization’s financial statements?

The Advanced Funding transaction does not have an effect on your organization’s financial statements for the following two reasons:  An off balance sheet Special Purpose Entity or Grantor Trust will be issuing the debt.  The Trust incurs and is obligated to pay the debt service.  Your organization will simply show your remittance payments to the Trust as you currently do for your monthly health care expense.  The required disclosure on your financial statements will be a footnote describing an asset with an offsetting liability. The ability to transfer the client’s liabilities to an off-balance sheet Trust will preserve the client’s current debt rating and ultimately allows for cheaper borrowing costs for future endeavors.

Does Dryden charge a fee to provide a Phase I Assessment?

No.  Dryden does not charge fees or retainers for Phase I Assessments.

How does Dryden derive it’s consulting fees?

Dryden’s consulting fees are based on a percentage of the overall financial transaction